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Which of the… (Class 12 Business Studies 2026, Q18)

questionbuddy.in/q/cbse-12-business-studies-2026-66-5-1-q18-require-higher-working-capital

Business StudiesCBSE Class 12 · Board exam 2026, set 66/5/1 · 1 mark · MCQ

CBSE Class 12 Business Studies 2026: question 18

Set in the CBSE Class 12 board exam of 2026, paper 66/5/1, section A, question 18, for 1 mark. Try it first; the hints and our step-by-step solution are below.

Q18 · 1 mark · MCQFinancial Management

Which of the following will require higher working capital ?

  1. (A)Trading organisations
  2. (B)Short processing cycles
  3. (C)High level of competition
  4. (D)Strict credit policy towards debtors

Source: official question paper from cbse.gov.in (PDF). See it in the full 2026 board paper, set 66/5/1.

Hints

Open one hint at a time and try again before the next.

Hint 1

Which option increases debtors and stock?

Hint 2

A strict credit policy keeps debtors low.

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. Trading firms, short processing cycles and a strict credit policy all reduce working capital needs.

  2. A high level of competition forces liberal credit and larger stocks, so more working capital is needed. Option (C).

    1 mark

Answer: (C) High level of competition

Where the marks are

  • Competition raises credit and inventory (1 mark)

Revise the chapter

Practise this chapterBoard-style questions from Financial Management, one at a time, marked against the answer key and marking points.Back to the full paper2026 board paper, set 66/5/1: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.